Baucus Statement on Consequences of Default, Need to Raise the Debt Limit

Floor Statement as Prepared for Delivery

Here in the U.S. Capitol, we walk in the footprints of our forefathers. Walking these halls, their presence is felt at every turn.

Just outside this chamber are the likenesses of Washington, Jefferson, Lincoln and dozens of statesmen, cast in bronze and marble.

At the end of this month, a new leader will be added to the Halls of Congress — Winston Churchill. A bust of the late prime minister will be added to the Capitol collection in the National Statuary Hall later this month.

Churchill once said, quote: “The price of greatness is responsibility.”

We here in Congress have a responsibility. We have a responsibility to conduct the business of this nation.

However, the action — or rather in-action — of a small group of Members in the House has crippled Congress and is now threatening to impede the ability of the United States to fill one of its greatest responsibilities — to pay the government’s bills.

Enough is enough.

It is completely irresponsible to threaten default on the nation’s debt.

Since 1789, this country has always honored its obligations. Even when the White House and the Capitol were burned to the ground in 1814, America still honored its debts.

America is the greatest country on Earth. We are the leaders of the free world. Nations look to us as examples in democracy. We are supposed to be “the shining city upon a Hill.” But unfortunately, the shine risks being tarnished by a debt default.

Now, I agree with many of my colleagues that more can be done to reduce the deficit and promote economic growth. But as the President said, we cannot negotiate under the threat of default on the nation’s debt.

The path is clear. We need to open the government and raise the nation's borrowing limit. Then, and only then, can we responsibly address the nation’s long-term budget challenges.

Right now, we need to come together to ensure we do not permit another self-inflicted wound to America’s economy.

That is what defaulting on the debt is, a self-inflicted wound with global consequences.

October 17 is fast approaching. At that time we will have exhausted all “extraordinary measures” to stay under the debt limit.

At that time the U.S. will be at risk of defaulting on payments.

This is dangerous territory. As of next Thursday, it is expected that the Treasury Department will only have 30 billion dollars in cash on hand, enough to support the government for one or two weeks.

After that, the government’s wallet is empty and we are in uncharted waters.

If the debt ceiling is breached, the government would immediately have to slash services by 20 to 30 percent, driving the nation back into a recession.

Make no mistake about it, Social Security and Medicare would be slashed, veterans benefits would be hit, farm payments, highway funding, the Department of Defense, payments to the disabled – every program this government runs would be devastated by cuts.

A default would also have global consequences.

Christine Lagarde, the managing director of the International Monetary Fund, warned that a failure to raise the debt ceiling could damage the entire global economy.

She said it is — quote — “mission-critical” that the debt limit be resolved as soon as possible.

We are the most important economy in world. We are the reserve currency for the world. Our Treasury bonds are the very foundation of the global financial system. A default could put the global economy in chaos.

The New York Times has an article today entitled “Default Threat Generates Fear Around the Globe.”

Let me read you a portion of the article: “Five years after the financial crisis in the United States helped spread a deep global recession, policy makers around the world again fear collateral damage, this time with their nations becoming victims not of Wall Street’s excesses but of a political system in Washington that to many foreign eyes no longer seems to be able to function efficiently.”

I have been here in the Senate for close to 35 years — in Congress, going on 39. I’ve seen my fair share of partisan fights.

Never in my time here have I seen Washington so broken.

We need to remember the people we work for and get back to the job they sent us here to do. Instead of creating crises, we should be helping to create jobs.

Right now, farmers in Montana can’t access their local FSA offices to get the support they need. They don’t have access to vital data from USDA to plan. And because the Farm Bill has been allowed to expire yet again, our ranchers are going on 2 years now, with no support in times of disaster.

But they don’t get a pass on their bills. They buck up, they work hard and they make good on their debts. Congress needs to do the same.

Today, Leader Reid and I are introducing legislation that suspends the debt limit, avoiding default.

The bill mirrors legislation we passed earlier this year and will suspend the debt limit until December 31, 2014, after the mid-term elections.

On January 1, 2015 a new debt limit is set which reflects whatever borrowing is done between passage of the bill and December 31, 2014.

It’s time for Congress to stop refighting old battles and drawing lines in the sand. It’s time for Congress to come together and do what is right for our nation.

Time is running short. We need to stop playing games. This “whale of a fight” is getting us nowhere.

The legislation that Leader Reid and I are introducing today provides a way for us to avoid a disastrous debt default.

We have an opportunity right now to work together to preserve the economic recovery we have worked so hard to achieve.

It’s time to pass a clean bill to keep the government open and operating.

It’s time for Congress to come together and avoid a disastrous debt default.

It’s time to provide some certainty to the economy. It’s time to provide some certainty to America’s families and businesses.

Time is running short. We need to come together to pull America back from the brink.

It was Winston Churchill who famously said, “You can always count on Americans to do the right thing - after they've tried everything else.”

We’ll, it’s time to do the right thing.

It’s time to do the right thing and then get back to doing the work people sent us here to do like passing legislation to help support jobs and make life better for the folks we work for.

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